Family Fight Heats up for Entertainment and Media Family Business Worth Billions

When billions of dollars are on the line, the end of a personal friendship can jeopardize business investments, as well as personal relationships, especially when one party’s mental competence is called into question. That’s exactly what happened when Sumner M. Redstone, the head of a media empire that includes Viacom and CBS, among others, disinherited his former lover and long-time friend, Manuela Herzer, and banished her from his multi-million-dollar mansion, which she was set to inherit before he kicked her out and changed his will.

Herzer filed a lawsuit claiming that, at 93 years old, Redstone’s mental capacity had deteriorated to the point where he was no longer fully aware of what he was doing and that he was improperly influenced by his daughter, Shari Redstone, with whom he had been estranged and just recently reconciled. Herzer’s complaint alleged Shari is influenced solely by her father’s wealth, while both Sumner and Shari accuse Herzer of being the gold digger.

After hearing testimony from Herzer and Shari, among others, including video testimony from Sumner, the California judge in charge of the case dismissed it. Herzer plans to appeal that decision, but even if she doesn’t succeed, her complaint has had consequences that have reached all over the country. The question of Redstone’s mental capacity has lead high-level executives in his companies to question whether he’s mentally capable of effectively running all the companies under his vast media empire.

In May, Redstone eliminated Philippe P. Dauman from his position as chief executive of Viacom and George S. Abrams from the trust that will control Restone’s companies in the event of his death or if he is determined to be mentally incapacitated. Redstone further removed his two longtime friends and coworkers from the board of National Amusements, a theater chain company that controls approximately 80% of the voting stock in both CBS and Viacom.

Dauman and Abrams have filed their lawsuit to ask the court to block Redstone from making these moves, alleging he can neither speak nor read, and is therefore mentally incapable of making the decision to remove them from prominent positions in his media empire. They also asked the court to order a mental examination to be conducted on Redstone immediately.

The lawsuits have divided Redstone’s business and personal relations as people in his life either agree his mental health is deteriorating or insist Redstone is still perfectly capable of acting in his own best interests. Viacom’s board received a letter from National Amusements that accused Viacom of supporting these allegedly vicious, personal attacks on both Redstone’s mental capacity and his daughter’s integrity. The letter was signed by Redstone, but the signature was little more than a wavy line.

Redstone’s attorneys have been arguing for the case to be moved to California, where Redstone lives, while attorneys for Dauman and Abrams insist Massachusetts is the proper place to argue the legal dispute because the trust in question has an office in Massachusetts and there are co-trustees who live in Massachusetts.

Judge George F. Phelan of Norfolk County Probate Court has put off ruling in the case until he is provided with more information. Having already spent more than five hours listening to arguments from both sides, Judge Phelan has requested additional documents from Herzer’s case, as well as the divorce agreement between Redstone and his ex-wife, Phyllis Redstone, because the agreement played a central role in creating the trust.

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